The Employees Provident Fund Organisation (EPFO) has extended the date for eligible members to opt for higher pensions until June 26, 2023. The EPFO said the members’ current contribution towards the employee provident fund (EPF) would be adjusted towards the employees’ pension scheme (EPS).
EPFO manages both EPF and EPS schemes. The higher pension has been a sensitive issue for a section of the public. After the Supreme Court’s intervention, the government has decided to implement the higher pension option on the actual wage instead of the statutory wage limit.
The EPFO’s May 11 circular explains how the amount will be calculated for transferring the money from the members’ provident fund account to the pension fund account.
How Will The Dues Be Calculated?
As per the circular, the dues will be calculated by the field officer (FO) after verifying the employer/s’ wages. Then, the FO will review each case and determine whether the joint options requests are valid.
For the calculation, the employer’s contribution will be calculated at 8.33 per cent of the actual basic salary from the date it exceeded the wage ceiling, fixed time-to-time, i.e. Rs 5,000 until May 31, 2001, Rs 6,500 until August 2014, and Rs 15,000 from September 01, 2014.
In addition, there will be an extra 1.16 per cent contribution from the employer on the basic salary above Rs 15,000 per month, effective September 1, 2014. The interest charged on the above contribution will be interest earned by the members on their PF contribution.
After the calculation is completed, FO will ascertain whether the dues are fully remitted to EPS, and if not, then how much is to be remitted from EPF. FO will also evaluate whether the balance is sufficient or not in the PF account. Then, the members will be issued a demand letter informing them about the dues. The FO is required to notify the pensioner/member through the last employer about the status. The due amount received must be transferred from the PF account to the pension fund, and for that, the member must give written consent to the last employer, who will then approach the FO.
Even when there is an inadequate balance in the PF account, the members will be informed; written consent obtained from them will be provided to the FO by the last employer stating that the employee will deposit the remaining dues, including interest.
Deadline For Consent
EPFO has stipulated three months for making the deposits and giving written consent for diverting funds from the PF account to the Pension fund.
While depositing the dues, the guideline says that funds should be transferred only from the bank account in the EPFO records. In payment through cheque, one must write the member’s name and contact number, application ID, UAN/PPO number, demand notice number, and date on the back side of the cheque. According to the circular, one can also transfer money online ‘if provided by EPFO’.
So, this circular tells about the calculation of dues for the eligible members but has put the pension amount computation method for a ‘follow through subsequent circular’, leaving doubt for a change in the computation method for pension. The pension is calculated by dividing the average pensionable salary of 60 months (five years) by the number of years the employee contributes to the PF by dividing it by 70. The eligible members, who want to apply for it, need to determine the suitability of a higher pension option for them and accordingly decide.